OXFORD FINANCE CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended March 31, 2004.


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-50049

OXFORD FINANCE CORPORATION

(Exact name of registrant as specified in its charter)


Maryland		01-061-5368

(State or other jurisdiction of		(I.R.S. Employer

incorporation or organization)		Identification No.)

133 North Fairfax Street

Alexandria, VA		22314

(Address of principal executive office)		(Zip Code)

(703) 519-4900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x. No o.

(2) Indicate by check mark whether the registrant is an accelerated filer. Yes o No x.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares of the issuer’s Common Stock, $.01 par value, outstanding as of May 13, 2004 was 5,200,000.

Item I. Financial Statements

OXFORD FINANCE CORPORATION

BALANCE SHEETS


	(Unaudited)
	March 31, 2004			December 31, 2003
ASSETS
Cash and cash equivalents	$	1,181,030		$	488,883
Investments:
Loans at fair value (cost of $65,281,313 and $62,460,108)		65,281,313			62,460,108
Less: unearned income		(984,138	)		(1,098,712	)
Investment in equity securities at fair value (cost of $1,759,820 and $1,752,204 respectively)		1,666,330			1,682,509
Other investments		302,865			302,865

Total Investments		66,266,370			63,346,770
Principal and interest receivable on loans		2,118,678			2,291,435
Interest receivable — cash and cash equivalents		—			293
Intangible assets, net		195,030			200,940
Prepaid & other assets		686,533			772,737

TOTAL ASSETS	$	70,447,641		$	67,101,058

LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Notes payable	$	24,018,147		$	20,688,714
Accounts payable		3,180			43,251
Accrued expenses and other liabilities		193,068			458,026
Customer deposits		278,018			246,021

Total Liabilities	$	24,492,413		$	21,436,012

STOCKHOLDERS’ EQUITY
Preferred stock, 10,000,000 shares authorized, no shares issued or outstanding	$	—		$	—
Common stock, $0.01 par value, 40,000,000 shares authorized and 5,200,000 shares issued and outstanding		52,000			52,000
Capital in excess of par value		45,739,152			45,739,152
Earnings in excess (deficit) of distributions		257,566			(56,411	)
Net unrealized depreciation on investments		(93,490	)		(69,695	)

Total Stockholders’ Equity		45,955,228			45,665,046

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	70,447,641		$	67,101,058

SEE ACCOMPANYING NOTES.

OXFORD FINANCE CORPORATION

STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months			Three Months
	Ended			Ended
	March 31, 2004			March 31, 2003
Interest and fee income
Interest and fee income — loans	$	1,862,341		$	1,824,740
Interest income — cash and cash equivalents		671			29,946

Total interest and fee income		1,863,012			1,854,686
Operating expenses
Salaries, payroll taxes and benefits		523,809			445,872
Interest and financing fees		348,833			134,638
General and administrative		314,472			252,864

Total operating expense		1,187,114			833,374

Net operating income		675,898			1,021,312
Costs associated with proposed sale of assets (Note 15)		(312,264	)		—
Net unrealized (depreciation) on investments		(23,795	)		(14,510	)
Net realized loss on investments		(49,657	)		—

Net increase in stockholders’ equity resulting from net income	$	290,182		$	1,006,802

Per common share data:
Earnings per common share - basic	$	0.06		$	0.19
Earnings per common share - diluted				$	0.06
Dividends declared and paid per common share	$	—		$	0.07
Weighted average common shares outstanding -
- - basic		5,200,000			5,200,000
- diluted		5,246,561			5,200,000

SEE ACCOMPANYING NOTES.

OXFORD FINANCE CORPORATION

STATEMENT OF CASH FLOWS AND CASH EQUIVALENTS

(UNAUDITED)


	Three Months			Three Months
	Ended			Ended
	March 31, 2004			March 31, 2003
Cash Flows from Operating Activities:
Net increase in stockholders’ equity resulting from net income	$	290,182		$	1,006,802
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation expense		17,290			12,479
Amortization of intangible asset		5,910			5,910
Amortization of deferred financing costs		91,315			21,616
Accretion of unearned income		(201,879	)		(136,930	)
Changes in operating assets and liabilities:
Interest receivable		83,257			(213,629	)
Prepaid and other assets		(10,879	)		(24,973	)
Accounts payable		(40,071	)		17,168
Accrued and other liabilities		(232,961	)		(22,400	)

Net Cash Flows Provided by Operating Activities		2,164			666,043

Cash Flows from Investing Activities:
Capital expenditures		(11,227	)		(14,254	)
Net increase in loans and equity investments		(2,628,222	)		(2,691,328	)

Net Cash Flows Used in Investing Activities		(2,639,449	)		(2,705,582	)

Cash Flows from Financing Activities:
Proceeds from borrowings		4,000,000			884,083
Repayments of borrowings		(670,568	)		(515,348	)
Dividends paid		—			(364,000	)

Net Cash Flows Provided by Financing Activities		3,329,432			4,735

Net (Decrease) Increase in Cash and Cash Equivalents		692,147			(2,034,804	)
Cash and Cash Equivalents — Beginning of Period		488,883			11,831,439

Cash and Cash Equivalents — End of Period	$	1,181,030		$	9,796,635

Supplemental Data:
Cash paid for interest	$	244,431		$	122,659
Non-cash Financing and Investing Activity:
Equity investments received in connection with loan originations	$	87,454		$	223,024

SEE ACCOMPANYING NOTES.

OXFORD FINANCE CORPORATION

SCHEDULE OF INVESTMENTS

(UNAUDITED)


		March 31, 2004
Portfolio Company	Investment	Cost (2)		Fair Value (2)
Agilix Corporation	Senior Debt	$	1,158,532	$	1,158,532
	Warrants to Purchase
	Common Stock		21,646		20,999

Alphavax Human Vaccines, Inc.	Senior Debt		321,997		321,997
	Warrants to Purchase
	Common Stock		1,932		2,008

Altus Biologics, Inc.	Senior Debt		1,935,021		1,935,021
	Warrants to Purchase
	Common Stock		53,294		36,364

Ambit Biosciences, inc.	Senior Debt		588,323		588,323
	Warrants to Purchase
	Preferred Stock		17,769		14,583

Amnis	Senior Debt		208,710		208,710

Amphora Discovery, Inc.	Senior Debt		3,075,010		3,075,010
	Warrants to Purchase
	Common Stock		101,218		66,188

Ardent Pharmaceuticals, Inc.	Senior Debt		168,915		168,915
	Warrants to Purchase
	Common Stock		9,143		4,506

Athenix, Inc.	Senior Debt		468,068		468,068
	Warrants to Purchase
	Preferred Stock		24,322		22,320

Axya Medical, Inc.	Senior Debt		34,223		34,223

Beyond Genomics, Inc.	Senior Debt		2,158,756		2,158,756
	Warrants to Purchase
	Common Stock		76,695		80,500

Biospect, Inc.	Senior Debt		1,421,972		1,421,972
	Warrants to Purchase
	Preferred Stock		22,866		22,769

BioTrove, Inc.	Senior Debt		1,152,385		1,152,385
	Warrants to Purchase
	Preferred Stock		22,973		29,027

Cellular Genomics, Inc.	Senior Debt		2,033,914		2,033,914
	Warrants to Purchase
	Preferred Stock		123,588		121,537

Ceptyr	Senior Debt		1,221,843		1,221,843
	Warrants to Purchase
	Preferred Stock		34,331		34,331

(Continued on next page)

OXFORD FINANCE CORPORATION

SCHEDULE OF INVESTMENTS

(UNAUDITED)

(Continued from prior page)


		March 31, 2004
Portfolio Company	Investment	Cost (2)		Fair Value (2)
Cogent Neuroscience, Inc. (1)	Intellectual Property		302,865		302,865

CropSolution, Inc.	Senior Debt		798,791		798,791
	Warrants to Purchase
	Common Stock		49,156		39,218

Dynogen Pharmaceuticals, Inc.	Senior Debt		911,233		911,233
	Warrants to Purchase
	Preferred Stock		30,821		28,589

Egea Biosciences, Inc.	Senior Debt		989,433		989,433
	Warrants to Purchase
	Preferred Stock		44,448		43,167

Elixir Pharmaceuticals, Inc.	Senior Debt		1,574,389		1,574,389
	Warrants to Purchase
	Common Stock		54,194		62,100

Elusys Therapeutics, Inc.	Senior Debt		299,155		299,155
	Warrants to Purchase
	Preferred Stock		8,031		8,474

Entelos, Inc.	Senior Debt		664,652		664,652

Guava Technologies, Inc.	Senior Debt		1,108,946		1,108,946
	Warrants to Purchase
	Preferred Stock		27,260		26,813

ICAgen, Inc.	Senior Debt		994,170		994,170

Impact Rx	Senior Debt		1,665,957		1,665,957

Infinity Pharmaceuticals	Senior Debt		3,836,849		3,836,849
	Warrants to Purchase
	Preferred Stock		87,578		82,155

Iomai Corporation	Senior Debt		2,326,258		2,326,258
	Warrants to Purchase
	Preferred Stock		36,855		35,792

Labcyte, Inc.	Senior Debt		771,620		771,620
	Warrants to Purchase
	Preferred Stock		29,523		30,295

LipoScience, Inc.	Senior Debt		1,624,221		1,624,221
	Warrants to Purchase
	Common Stock		62,391		60,456

(Continued on next page)

OXFORD FINANCE CORPORATION

SCHEDULE OF INVESTMENTS

(Continued from prior page)


		March 31, 2004
Portfolio Company	Investment	Cost (2)		Fair Value (2)
Locus Discovery, Inc.	Senior Debt		2,208,340		2,208,340
	Warrants to Purchase
	Common Stock		175,478		124,500

MedVantx, Inc.	Senior Debt		102,557		102,557
	Warrants to Purchase
	Preferred Stock		2,481		2,481

Memory Pharmaceuticals, Inc.	Senior Debt		3,148,159		3,148,159
	Warrants to Purchase
	Common Stock		137,463		183,173

Metabasis Therapeutics, Inc.	Senior Debt		1,141,686		1,141,686

Microbia, Inc.	Senior Debt		2,419,712		2,419,712

Morphotek, Inc.	Senior Debt		1,026,289		1,026,289

Navimedix, Inc.	Senior Debt		1,361,765		1,361,765
	Warrants to Purchase
	Common Stock		24,319		24,293

Nobex, Inc.	Senior Debt		425,457		425,457
	Warrants to Purchase
	Preferred Stock		22,762		18,391

Norak BioSciences	Senior Debt		899,554		899,554
	Warrants to Purchase
	Preferred Stock		18,301		18,631

Nuada Pharmaceuticals	Senior Debt		544,951		544,951
	Warrants to Purchase
	Preferred Stock		31,492		24,094

Odyssey Thera, Inc.	Senior Debt		707,322		707,322
	Warrants to Purchase
	Preferred Stock		23,937		23,438

Optobionics Corporation	Senior Debt		1,041,465		1,041,465
	Warrants to Purchase
	Preferred Stock		48,339		46,802

Phenomix, Inc.	Senior Debt		243,848		243,848
	Warrants to Purchase
	Preferred Stock		3,884		3,884

Plexxikon, Inc.	Senior Debt		1,553,504		1,553,504
	Warrants to Purchase
	Preferred Stock		75,104		72,980

Protein Forest, Inc.	Senior Debt		161,152		161,152
	Warrants to Purchase
	Preferred Stock		3,143		3,143

Protometrix, Inc.	Senior Debt		614,706		614,706

(Continued on next page)

OXFORD FINANCE CORPORATION

SCHEDULE OF INVESTMENTS

(Continued from prior page)


		March 31, 2004
Portfolio Company	Investment	Cost (2)		Fair Value (2)
Qualyst, Inc.	Senior Debt		82,163		82,163
	Warrants to Purchase
	Preferred Stock		1,653		1,653

Quantum Dot. Inc.	Senior Debt		352,842		352,842
	Warrants to Purchase
	Preferred Stock		8,423		8,498

Renovis, Inc. (3)	Senior Debt		1,493,708		1,493,708

Sagres Discovery, Inc.	Senior Debt		1,253,162		1,253,162
	Warrants to Purchase
	Preferred Stock		36,304		37,824

Sicel, Inc.	Senior Debt		105,780		105,780

Stemco Biomedical	Senior Debt		719,490		719,490
	Warrants to Purchase
	Preferred Stock		19,236		19,789

Stressgen Biotechnologies, Inc. (3)	Senior Debt		612,939		612,939

Structural GenomiX, Inc.	Senior Debt		3,221,574		3,221,574
	Warrants to Purchase
	Preferred Stock		91,806		91,079

Surface Logix, Inc.	Senior Debt		512,330		512,330
	Warrants to Purchase
	Common Stock		2,642		2,600

Targeted Molecules Corporation	Senior Debt		158,207		158,207
	Warrants to Purchase
	Preferred Stock		3,736		3,642

Transmolecular, Inc.	Senior Debt		85,498		85,498
	Warrants to Purchase
	Preferred Stock		6,004		4,858

TransTech Pharma, Inc.	Senior Debt		1,297,096		1,297,096
	Warrants to Purchase
	Common Stock		33,707		30,105

Trubion Pharmaceuticals, Inc.	Senior Debt		1,739,582		1,739,582
	Warrants to Purchase
	Preferred Stock		30,995		30,549

US Genomics, Inc	Senior Debt		497,004		497,004
	Warrants to Purchase
	Common Stock		3,510		3,489

Vanda Pharmaceuticals, Inc.	Senior Debt		406,937		406,937
	Warrants to Purchase
	Common Stock		15,067		14,243

Xcyte Therapies, Inc. (3)	Senior Debt		645,054		645,054

Total Investments		$	66,359,860	$	66,266,370

(Continued on next page)

OXFORD FINANCE CORPORATION

SCHEDULE OF INVESTMENTS

(Continued from prior page)


		December 31, 2003
Portfolio Company	Investment	Cost (2)		Fair Value (2)
Agilix Corporation	Senior Debt	$	1,253,564	$	1,253,564
	Warrants to Purchase
	Common Stock		21,646		21,445

Alphavax Human Vaccines, Inc.	Senior Debt		360,881		360,881
	Warrants to Purchase
	Common Stock		1,932		2,053

Altus Biologics, Inc.	Senior Debt		2,106,928		2,106,928
	Warrants to Purchase
	Common Stock		53,294		37,931

Ambit Biosciences, inc.	Senior Debt		635,301		635,301
	Warrants to Purchase
	Preferred Stock		17,769		14,987

Amnis	Senior Debt		230,392		230,392

Amphora Discovery, Inc.	Senior Debt		3,502,758		3,502,758
	Warrants to Purchase
	Common Stock		101,218		66,523

Ardent Pharmaceuticals, Inc.	Senior Debt		185,343		185,343
	Warrants to Purchase
	Common Stock		9,143		4,113

Athenix, Inc.	Senior Debt		235,704		235,704
	Warrants to Purchase
	Preferred Stock		20,018		14,013

Axya Medical, Inc.	Senior Debt		41,994		41,994

Beyond Genomics, Inc.	Senior Debt		2,386,815		2,386,815
	Warrants to Purchase
	Common Stock		76,695		80,500

BioTrove, Inc.	Senior Debt		1,160,138		1,160,138
	Warrants to Purchase
	Preferred Stock		22,973		29,027

Cellular Genomics, Inc.	Senior Debt		2,243,644		2,243,644
	Warrants to Purchase
	Preferred Stock		123,588		124,454

Ceptyr	Senior Debt		1,328,359		1,328,359
	Warrants to Purchase
	Preferred Stock		34,331		34,331

Cogent Neuroscience, Inc. (1)	Intellectual Property		302,865		302,865

CropSolution, Inc.	Senior Debt		857,067		857,067
	Warrants to Purchase
	Common Stock		49,156		48,564

Dynogen Pharmaceuticals, Inc.	Senior Debt		1,012,099		1,012,099
	Warrants to Purchase
	Preferred Stock		30,821		29,394

Egea Biosciences, Inc.	Senior Debt		1,075,213		1,075,213
	Warrants to Purchase
	Preferred Stock		44,488		44,333

Elixir Pharmaceuticals, Inc.	Senior Debt		1,764,650		1,764,650
	Warrants to Purchase
	Common Stock		55,876		64,703

(Continued on next page)

OXFORD FINANCE CORPORATION

SCHEDULE OF INVESTMENTS

(Continued from prior page)


		December 31, 2003
Portfolio Company	Investment	Cost (2)		Fair Value (2)
Elusys Therapeutics, Inc.	Senior Debt		332,521		332,521
	Warrants to Purchase
	Preferred Stock		8,031		8,674

Entelos, Inc.	Senior Debt		779,192		779,192

Guava Technologies, Inc.	Senior Debt		1,201,524		1,201,524
	Warrants to Purchase
	Preferred Stock		27,260		27,260

ICAgen, Inc.	Senior Debt		1,073,899		1,073,899

Impact Rx	Senior Debt		985,179		985,179

Infinity Pharmaceuticals	Senior Debt		4,185,099		4,185,099
	Warrants to Purchase
	Preferred Stock		87,578		83,136

Iomai Corporation	Senior Debt		2,273,517		2,273,517
	Warrants to Purchase
	Preferred Stock		34,015		34,015

LipoScience, Inc.	Senior Debt		1,801,477		1,801,477
	Warrants to Purchase
	Common Stock		62,391		61,873

Locus Discovery, Inc.	Senior Debt		2,550,747		2,550,747
	Warrants to Purchase
	Common Stock		175,478		127,579

Memory Pharmaceuticals, Inc.	Senior Debt		2,492,151		2,492,151
	Warrants to Purchase
	Common Stock		119,129		167,209

Metabasis Therapeutics, Inc.	Senior Debt		788,533		788,533

Microbia, Inc.	Senior Debt		2,628,394		2,628,394

Navimedix, Inc.	Senior Debt		1,297,828		1,297,828
	Warrants to Purchase
	Common Stock		21,574		22,010

Nobex, Inc.	Senior Debt		461,186		461,186
	Warrants to Purchase
	Preferred Stock		22,762		18,514

Norak BioSciences	Senior Debt		981,452		981,452
	Warrants to Purchase
	Preferred Stock		18,301		19,065

Nuada Pharmaceuticals	Senior Debt		610,431		610,431
	Warrants to Purchase
	Preferred Stock		31,492		24,587

Odyssey Thera, Inc.	Senior Debt		758,114		758,114
	Warrants to Purchase
	Preferred Stock		23,937		23,899

Optobionics Corporation	Senior Debt		1,114,182		1,114,182
	Warrants to Purchase
	Preferred Stock		48,339		47,653

Picoliter, inc.	Senior Debt		854,962		854,962
	Warrants to Purchase
	Preferred Stock		29,523		31,248

Plexxikon, Inc.	Senior Debt		1,729,548		1,729,548
	Warrants to Purchase
	Preferred Stock		75,104		74,620

Protometrix, Inc.	Senior Debt		701,990		701,990
	Warrants to Purchase
	Preferred Stock		61,423		47,187

Quantum Dot	Senior Debt		276,990		276,990
	Warrants to Purchase
	Preferred Stock		6,333		6,505

(Continued on next page)

OXFORD FINANCE CORPORATION

SCHEDULE OF INVESTMENTS

(Continued from prior page)


		December 31, 2003
Portfolio Company	Investment	Cost (2)		Fair Value (2)
Sagres Discovery, Inc.	Senior Debt		1,390,175		1,390,175
	Warrants to Purchase
	Preferred Stock		36,304		38,428

Stemco Biomedical	Senior Debt		406,713		406,713
	Warrants to Purchase
	Preferred Stock		10,549		11,355

Stressgen Biotechnologies, Inc. (3)	Senior Debt		679,072		679,072

Structural GenomiX, Inc.	Senior Debt		3,563,859		3,563,859
	Warrants to Purchase
	Preferred Stock		91,806		93,695

Surface Logix, Inc.	Senior Debt		554,295		554,295
	Warrants to Purchase
	Common Stock		2,642		3,137

Targeted Molecules Corporation	Senior Debt		171,247		171,247
	Warrants to Purchase
	Preferred Stock		3,736		3,736

Transmolecular, Inc.	Senior Debt		94,913		94,913
	Warrants to Purchase
	Preferred Stock		6,004		4,937

TransTech Pharma, Inc.	Senior Debt		1,174,418		1,174,418
	Warrants to Purchase
	Common Stock		29,118		29,155

Triad Therapeutics, Inc.	Senior Debt		121,134		121,134
	Warrants to Purchase
	Common Stock		3,865		4,086

Trubion Pharmaceuticals, Inc.	Senior Debt		1,609,569		1,609,569
	Warrants to Purchase
	Preferred Stock		24,669		24,719

US Genomics, Inc	Senior Debt		374,348		374,348

Vanda Pharmaceuticals, Inc.	Senior Debt		442,480		442,480
	Warrants to Purchase
	Common Stock		14,424		14,424

Xcyte Therapies, Inc.	Senior Debt		519,408		519,408
	Warrants to Purchase
	Preferred Stock		13,468		13,431

Total Investments		$	63,416,465	$	63,346,770

(1) Non-income producing.

(2) None of the investments listed are readily marketable. The warrants we hold represent, in each instance, less than 1% of the company issuing the warrants and are not currently income producing.

(3) The portfolio company is publicly traded.

SEE ACCOMPANYING NOTES.

OXFORD FINANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2004

NOTE 1. UNAUDITED INTERIM FINANCIAL STATEMENTS

Interim financial statements of Oxford Finance Corporation (the “Company”, “Oxford”, “we” or “us”) are prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair presentation of financial statements for the interim periods have been included. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. These financial statements and the accompanying notes should be read in connection with the audited financial statements of Oxford Finance Corporation for the year ended December 31, 2003, which are included in its Form 10K, as amended filed on April 30, 2004. The results of operations for interim periods are not necessarily indicative of results to be expected for the year.

NOTE 2. DESCRIPTION OF BUSINESS

The Company’s investment objective is to achieve a high level of current income from interest payments from the loans made to portfolio companies and to achieve capital gains through an increase in the value of the warrants received from portfolio companies in connection with these loans. The Company provides loans primarily to emerging-growth life sciences companies. The Company generally secures loans with equipment and other assets.

The Company was incorporated under the General Corporation Laws of the State of Maryland on October 23, 2001. On December 31, 2002, the Company elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940. In addition, the Company intends to elect to be regulated for tax purposes as a Regulated Investment Company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) for the calendar year 2003.

To qualify as a RIC for federal income tax purposes, the Company was required to distribute any “earnings and profits” (as determined for federal income tax purposes) from operations prior to the elective election to be taxed as a RIC. To meet this requirement, the Company paid dividends during 2002 of substantially all of the earning and profits for the year ended December 31, 2002.

As a RIC, the Company will be required to pay out as a dividend 90% of its ordinary income and short-term capital gains for each taxable year in order to maintain its status as a RIC under Subtitle A, Chapter 1 of Subchapter M of the Code. The Company has paid, and intends to pay out, as a dividend substantially all those amounts. The amount to be paid out as a dividend is determined by the Board of Directors each quarter and is based on the annual earnings estimated by the management of the Company. The Company has a policy of retaining long-term capital gains and not paying them out as dividends.

Recent Developments

On January 28, 2004, the Company entered into a definitive Asset Purchase Agreement (the “Agreement”) with Oxford Finance Acquisition Corp, a Delaware corporation (“Purchaser”) and a wholly-owned subsidiary of Sumitomo Corporation of America, a New York corporation and integrated global trading firm with diversified investments in businesses producing both capital and consumer products (“Sumitomo”). Under the Agreement, Purchaser will acquire all of the assets and assume certain liabilities related to the Company’s business of providing senior secured equipment financing primarily to emerging-growth life science companies (the “Business”), including, without limitation, all of the Company’s financing contracts, leases, securities or warrants issued in connection with any financing contract and all intangible assets, such as the rights to use the name “Oxford Finance Corporation”.

The Agreement contains representations, warranties, covenants, indemnifications and provisions that are customary for a transaction of this type. The closing of the transaction will be contingent upon approval of any final agreement by the shareholders of Oxford as well as certain regulatory approvals. This description of the transaction, including the Agreement, is qualified in its entirety by reference to the full text of the Agreement included with the Company’s current report on Form 8-K as filed with the U.S. Securities and Exchange Commission (the “Commission”) on February 6, 2004. The transaction is expected to close during the second quarter of fiscal 2004. We cannot assure you that the transactions contemplated by the Agreement will occur.

In connection with the Agreement, the stockholders will also be asked to approve a Plan of Liquidation and Dissolution, under which the Company will take the necessary steps following consummation of the asset sale and distribution of the related proceeds to dissolve its status as a corporation under Maryland law, and withdraw its election to be a business development company under the Investment Company Act of 1940, as amended.

Costs associated with this transaction are expensed as incurred.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. The Company believes that the following are some of the more critical judgment areas in the application of the Company’s accounting policies that currently affect the Company’s financial condition and results of operations.

Stock-based compensation - The Company accounts for stock-based compensation arrangements in accordance with the intrinsic value method as defined by the Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock-Based Compensation – Transition and Disclosure”, which for the Company requires certain disclosures related to the Company stock-based compensation arrangements. Under APB No. 25 and related interpretations, if the exercise price of the employee stock options equals or exceeds the fair value of the underlying stock on the date of grant, and other criteria are met, the Company records no compensation expense for the award of employee stock options.

On February 28, 2003, the Company granted 674,000 stock options with a strike price of $8.81, to executive management. One third of these options vested immediately, with the remainder then vesting on a quarterly basis ratably over the next three years. These options expire in February, 2013. The following tables presents the effect on net increase (decrease) in stockholders’ equity resulting from net earnings / net income (loss) and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, to the Company’s stock-based compensation.


	Three months			Three months
	Ended			Ended
	March 31, 2004			March 31, 2003
Net increase (decrease) in stockholders’ equity resulting form earnings / net income (loss)	$	290,182		$	1,006,802
Add: Stock-based compensation included in net increase (decrease) in stockholders’ equity resulting from earnings / net income (loss)		—			—
Less: Stock-based compensation expense determined under the fair value based method for all awards		(90,991	)		(363,961	)

Pro Forma net increase (decrease) in stockholders’ equity resulting form earnings / net income (loss)	$	199,191		$	642,841

Earnings (loss) per share
Basic and diluted - as reported	$	0.06		$	0.19
Basic and diluted - pro forma	$	0.04		$	0.12

Use of estimates in the preparation of financial statements - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ from those estimates. As a BDC, because all of the Company’s investments were acquired in privately negotiated transactions and do not have readily determinable market values, the investments are required to be carried at fair value. Fair value is determined in good faith by the Company’s Board of Directors pursuant to the Company’s valuation policy, with changes in value reported quarterly through the Company’s statement of operations under the caption “unrealized appreciation (depreciation) on investments.” Determination of fair value involves subjective judgments and the resultant values may not represent amounts at which investments could be bought or sold in an independent third party transaction, and the difference could be material.

NOTE 4. INVESTMENTS

At March 31, 2004 and December 31, 2003, investments consisted of the following:


	March 31, 2004						December 31, 2003
	Cost			Fair Value			Cost			Fair Value
Senior Debt	$	65,281,313			65,281,313		$	62,460,109			62,460,109
Investments in Equity Securities		1,759,820			1,666,330			1,752,204			1,682,509
Other Investments		302,865			302,865			302,865			302,865
Unearned income		(984,138	)		(984,138	)		(1,098,713	)		(1,098,713	)

Total	$	66,359,860		$	66,266,370		$	63,416,465		$	63,346,770

The composition of the Company’s portfolio of investments as of March 31, 2004 and December 31, 2003 at cost and fair values was as follows:


	Investments at Fair Value				Investments at Fair Value
	March 31, 2004				December 31, 2003
Senior Debt	$	64,297,175	96.8	%	$	61,361,396	96.8	%
Investments in Equity Securities		1,666,330	2.7	%		1,682,509	2.7	%
Other Investments		302,865	0.5	%		302,865	0.5	%

Total	$	66,266,370	100.0	%	$	63,346,770	100.0	%


	Investments at Cost
	March 31, 2004				December 31, 2003
Senior Debt	$	64,297,175	96.7	%	$	61,361,396	96.7	%
Investments in Equity Securities		1,759,820	2.8	%		1,752,204	2.8	%
Other Investments		302,865	0.5	%		302,865	0.5	%

Total	$	66,359,860	100.0	%	$	63,416,465	100.0	%

The Company provides loans primarily to emerging-growth life science companies. The Company’s loans are generally collateralized by a first priority security interest in essential-use assets, primarily laboratory equipment, and to a lesser extent, computers, furniture, software and manufacturing equipment that tends to retain secondary market value. The monthly amortization of the loans is intended to keep the loan balances in line with secondary market values based on management’s experience. Generally, the Company does not finance special purpose or customized equipment. The Company’s loans are amortizing term loans that generally mature between 30 and 48 months. Debt instruments are at fixed rates of interest which range from 600 to 1,000 basis points above coterminous Treasury Bills.

Set forth below is a table showing the composition of Oxford’s portfolio by industry section at cost and fair value at March 31, 2004 and December 31, 2003.


	Investments at Fair Value
	March 31, 2004					December 31, 2003
			Percent of					Percent of
Industry Sector:	Investment		Total			Investment		Total
Therapeutics	$	34,824,134		54	%	$	34,003,439		54	%
Enabling technology		21,462,824		33	%		20,145,320		32	%
Diagnostics		1,684,676		3	%		1,863,350		3	%
Agriculture biotechnology		1,328,397		2	%		1,155,348		2	%
Other		6,966,340		8	%		6,179,313		10	%

Total	$	66,266,370		100	%	$	63,346,770		100	%


	Investments at Cost
	March 31, 2004					December 31, 2003
			Percent of					Percent of
Industry Sector:	Investment		Total			Investment		Total
Therapeutics	$	34,788,516		53	%	$	33,952,177		54	%
Enabling technology		21,575,506		34	%		20,259,032		32	%
Diagnostics		1,686,611		3	%		1,863,868		3	%
Agriculture biotechnology		1,340,337		2	%		1,161,945		2	%
Other		6,968,890		8	%		6,179,443		10	%

Total	$	66,359,860		100	%	$	63,416,465		100	%

Investments in portfolio companies increased from $63,346,770 to $66,266,371 during the first quarter of 2004. Repayments during the first quarter of 2003 include a prepayment in full of an investment in a portfolio company with a balance of $5,948,421 in 2003. This portfolio company was acquired during the first quarter of 2003, and the new parent company elected to repay the loan as well as a prepayment fee of $551,759 which is included in interest and fee income in the statement of operations. During the first quarter of 2004, portfolio companies made regularly scheduled principal repayments of $3,533,620.

Investments in equity securities represent the Company’s ownership of warrants received primarily as part of a loan arrangement. In certain loan arrangements, warrants are received from the borrower as additional origination fees to provide the Company with an enhanced internal rate of return. At March 31, 2004, 78% of Oxford’s loans had associated warrants. When the Company receives a warrant to purchase stock in a borrower in connection with a loan, the warrant will typically have an exercise price, equal to the price of the stock as determined in the most recent equity round of financing, and entitles the Company to purchase a non-controlling percentage of the borrower’s stock. Any resulting discount on the loan from recordation of warrants is accreted into income over the term of the loan.

At March 31, 2004, there was one investment classified on the balance sheet as “Other Investments” with a fair value of approximately $302,000, or approximately 0.5% of the investment portfolio. This portfolio company, which Oxford had made a loan to during early 2002, filed for Chapter 7 bankruptcy protection on December 3, 2002. During 2002, this loan investment was placed on non-accrual status and the Company recorded a provision for loan loss of $315,000. During 2003, Oxford took possession of certain collateral that had secured this loan. We believe the value of this collateral approximates the current recorded investment balance. There can be no assurance that the collateral value will be sufficient to repay the investment in full. We had no other loans or investments that were greater than 30 days delinquent at March 31, 2004. Subsequent to March 31, 2004, one portfolio customer with loans with a fair value of approximately $1,325,000 became 30 days past due. Oxford management believes that the investment is fairly valued and has not recorded any adjustments to its value. Other than as described above, no other investments were greater than 30 days past due.

NOTE 5 BORROWINGS

On November 27, 2002, the Company entered into a Master Loan and Security Agreement with Farmers & Mechanics Bank (“F&M Bank”). Pursuant to the agreement, F&M Bank agreed to provide the Company $7,500,000 in term loans that had to be drawn down by April 30, 2003. The Company had the option of selecting a fixed interest rate equal to F&M Bank’s like term cost of funds plus 320 basis points or a floating interest rate equal to the base rate plus 1 percent. The base rate is equal to the highest per annum rate published from time to time in the Wall Street Journal. The obligations to F&M Bank to repay the loans are secured by certain

eligible loans. The average interest rate on the Company’s borrowings was a fixed rate of 6.32% at March 31, 2004.

At March 31, 2004 the Company had outstanding $5,518,147 and pledged certain loans as collateral. The loans had terms coterminous with the Company’s pledged customer loans and ranged between 30 and 48 months with fixed interest rates ranging from 4.97% to 6.95%. Monthly principal and interest payments due on these term loans commenced on January 15, 2003 and end on November 15, 2006. The Company is subject to certain financial covenants including an interest rate coverage ratio and a maximum debt to net worth covenant.

On October 17, 2003, the Company entered into a Master Loan and Security Agreement with National City Bank, as administrative agent, and other lenders as part of a syndicate. Pursuant to the agreement, National City Bank and other lenders agreed to provide the Company $35,000,000 in revolving loans that must be drawn down by May 31, 2005. If the Company draws on the line of credit, the Company has the option of selecting an interest rate equal to the 30-Day LIBOR plus 325 basis points or the base rate which is the prime rate plus 150 basis points. The obligations to National City Bank and other lenders to repay the loans are secured by certain eligible loans. Concurrent with this agreement, the Company cancelled its previous Master Loan and Security Agreement, as amended, with National City Bank dated September 25, 2003. As of May 14, 2004, the Company has utilized $16,500,000 of this line and has $18,500,000 remaining available. The Company is subject to a borrowing base and certain financial covenants including an interest rate coverage ratio and a maximum debt to net worth covenant.

In connection with our election to be regulated as a BDC, we intend to elect to be treated as a RIC under Subchapter M of the Internal Revenue Code for the year 2003. As a RIC, we are required to distribute annually 90% or more of our investment company taxable income and 98% of our realized short-term capital gains to shareholders. As a BDC, our asset coverage must be at least 200% after each issuance of Senior Securities. As of March 31, 2004, the Company’s asset coverage was approximately 291%.

NOTE 6. EARNINGS / (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted loss per share for the three months ended March 31:


	2004
Net increase in stockholder’s equity resulting from earnings/net income	$	290,182
Denominator for basic weighted average shares		5,200,000
Dilutive potential shares		46,451

Denominator for diluted weighted average shares		5,246,451
Basic earnings per common share	$	0.06
Diluted earnings per common share	$	0.06


	2003
Net increase in stockholder’s equity resulting from earnings/net income	$	1,006,802
Denominator for basic weighted average shares		5,200,000
Dilutive potential shares		—

Denominator for diluted weighted average shares		5,200,000
Basic earnings per common share	$	0.19
Diluted earnings per common share	$	0.19

NOTE 7. RELATED PARTY TRANSACTIONS

During 2003 Oxford Finance and a related party, Friedman Billings and Ramsey & Co. (“FBR”) entered into an agreement in which Oxford retained FBR to serve as the financial

advisor to the Company in connection with the Company’s consideration and possible implementation of a strategic transaction, including without limitation the potential purchase of another entity through the purchase of the capital stock , or the potential sale of all or substantially all of the assets and/or liabilities or capital stock of the Company. In connection with FBR’s proposed service, upon the completion of any qualified transaction, Oxford will pay FBR 1% of the fair market value of the aggregate consideration, plus 5% of the fair market value of any aggregate consideration received by the Company’s shareholders as of the closing of the transaction in excess of $10.00 per share. Mr. Philbrick and Mr. Altenburger will receive in the range of $9.32 to $9.68 per share in exchange for their respective Oxford shares, the same as every other Oxford stockholder. Mr. Philbrick will receive employment compensation in the amount of $900,000 over 3 years and a total of $307,401 in consideration for the cancellation of his options. Mr. Altenburger will receive employment compensation in the amount of $175,000 and a total of $124,280 in consideration for the cancellation of his options. Messrs. Philbrick and Altenburger will receive approximately $7,800 and $6,522 respectively in other compensation consisting of contributions to Oxford’s 401(k) plan and premiums paid for group term life insurance and long-term disability.

NOTE 8. FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the three months ended March 31, 2004 and 2003:


	Three Months			Three Months
	Ended			Ended
	March 31, 2004			March 31, 2003
Per Share Data - basic and diluted:
Net asset value at beginning of period	$	8.78		$	8.81

Net operating income		0.07			0.19
Increase in unrealized depreciation on investments		(0.01	)		—

Net increase in stockholders’ equity resulting from earnings		0.06			0.19

Dividends paid		—			(0.07	)
Net decrease in stockholders’ equity resulting from distributions		—			(0.07	)

Net asset value at end of period	$	8.84		$	8.94

Ratio/Supplemental Data:
Net assets at end of period	$	45,955,228		$	46,462,230
Ratio of operating expenses to average net assets		2.6	%		1.8	%
Ratio of net operating income to average net assets		1.5	%		2.2	%

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

ALL STATEMENTS CONTAINED HEREIN, OTHER THAN HISTORICAL FACTS, MAY CONSTITUTE “FORWARD-LOOKING STATEMENTS” THESE STATEMENTS MAY RELATE TO, AMONG OTHER THINGS, FUTURE EVENTS OR OUR FUTURE PERFORMANCE OR FINANCIAL CONDITION. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS “MAY,” “MIGHT,” “BELIEVE,” “WILL,” “PROVIDED,” “ANTICIPATE,” “FUTURE,” “COULD,” “GROWTH,” “PLAN,” “INTEND,” “EXPECT,” “SHOULD,” “WOULD,” “IF,” “SEEK,” “POSSIBLE,” “POTENTIAL” OR THE NEGATIVE OF SUCH TERMS OR COMPARABLE TERMINOLOGY. THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, (1) ADVERSE CHANGES IN INTEREST RATES; (2) OUR FAILURE OR INABILITY TO ESTABLISH OR MAINTAIN REFERRAL ARRANGEMENTS WITH VENTURE CAPITAL FUNDS TO GENERATE LOAN OPPORTUNITIES; (3) THE LOSS OF ONE OR MORE OF OUR EXECUTIVE OFFICERS,; (4) OUR INABILITY TO MAINTAIN A CREDIT FACILITY ON TERMS REASONABLY ACCEPTABLE TO US, IF AT ALL; (5) OUR INABILITY TO SUCCESSFULLY SECURITIZE OUR LOAN PORTFOLIO ON TERMS REASONABLY ACCEPTABLE TO US, IF AT ALL; (6) THE DECISION OF OUR COMPETITORS TO AGGRESSIVELY SEEK TO MAKE SENIOR LOANS TO LIFE SCIENCES BUSINESSES ON TERMS MORE FAVORABLE THAN WE INTEND TO PROVIDE; AND (7) THOSE FACTORS LISTED UNDER THE CAPTION “RISK FACTORS” IN OUR FORM 10, AS FILED ON MARCH 21, 2003. WE CAUTION READERS NOT TO PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING STATEMENTS. WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE AFTER THE DATE OF THIS REPORT.

THE FOLLOWING ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO CONTAINED ELSEWHERE IN THIS REPORT.

OVERVIEW

Oxford is a financial services company that provides senior secured equipment financing primarily to emerging-growth life science companies. Such financings are generally in the form of loans with equity features, typically warrants. Oxford’s investment objective is to achieve a high level of current income from interest payments and transaction fees from the loans it makes to portfolio companies and to achieve capital gains through an increase in the value of the warrants it expects to receive from its portfolio companies in connection with these loans. Oxford generally secures loans with equipment and other assets.

Oxford was incorporated under the general corporation laws of the state of Maryland on October 23, 2001. On December 31, 2002, Oxford elected to be regulated as a business development company, under the Investment Company Act of 1940, as amended. In addition, when Oxford files its 2003 tax returns it intends to elect to be regulated for tax purposes as a regulated investment company, under Subchapter M of the Internal Revenue Code of 1986, as amended, for the calendar year 2003.

To qualify as a regulated investment company for federal income tax purposes, Oxford was required to distribute any “earnings and profits” (as determined for federal income tax purposes) from operations prior to the election to be taxed as a regulated investment company. To meet this requirement, Oxford paid dividends during 2002 and 2003 of substantially all of the earnings and profits for the years ended December 31, 2002 and 2003, respectively.

As a regulated investment company, Oxford must pay out as a dividend 90% of its ordinary income and short-term capital gains for each taxable year in order to maintain its status as a regulated investment company under Subtitle A, Chapter 1 of Subchapter M of the Code. Oxford has and intends to pay out as a dividend substantially all those amounts. The amount to be paid out as a dividend is determined by the board of directors each quarter and is based on the annual earnings estimated by the management of Oxford. Oxford has a policy of retaining long-term capital gains and not paying them out as dividends.

As of March 31, 2004, Oxford had outstanding investments in loans of $64.3 million, an increase of $3 million, or 5%, from $61.3 million at December 31, 2003 and equity investments of $1.7 million at March 31, 2004 and December 31, 2003. Oxford acquired its equity investments primarily in connection with its loans. For the quarter ended March 31, 2004, Oxford originated approximately $9.2 million of loans.

Oxford’s principal executive offices are located at 133 N. Fairfax Street, Alexandria, Virginia 22314. Oxford’s telephone number is (703) 519-4900. Oxford’s web site address is www.oxfordfinance.com.

Oxford’s Industry

Oxford believes that significant opportunities exist to provide its lending products to emerging-growth life science companies. New life science enterprises are emerging at a

rapid pace and require significant amounts of capital as they transition from start-up through maturity. While much of this need is met through traditional private equity funds, federal grants and research and development collaborations with large pharmaceutical firms, the cost of these capital vehicles is often very high. Oxford’s equipment-based lending solutions allow firms to leverage their equity and lower their overall cost of capital. Oxford believes that the combination of its contacts within the life science industry and its lending products will make us a source of capital to emerging-growth life science companies.

Oxford believes the life science industry has growth potential driven by the need for new medical treatments, improved research and development technologies and improved discovery technologies and diagnostic tools. Oxford expects that the future value creation from the inventions in the life science industry will lead to improvements in the span and quality of life and present lending opportunities for it in the future.

In general, Oxford expects that emerging life science companies will have equipment expenditures totaling approximately 20% of their total expense budgets. Total financing for the biotech industry was $16.3 billion in 2003, and this generated a potential market size for Oxford’s lending products of approximately $3.2 billion. This figure has grown in recent years as existing venture capitalists are allocating increasing percentages of their funds to life science portfolios and as a number of new funds are emerging focused exclusively on the life science industry. Oxford believes that the equipment financing needs of emerging-growth life science companies are not adequately served at present by traditional sources, presenting Oxford with potential market opportunities.

During the quarter ended March 31, 2004, biotechnology companies had substantial venture capital funding activity and was the best first quarter since 2000. biotechnology companies continued to access large amounts of capital both publicly and privately. In addition, during the quarter, biotech had significant FDA approvals, forged significant partnerships and raised more money than ever before. Biotech raised a total of $5.4 billion in the fourth quarter versus $5.3 billion for the first quarter of 2004, and more than $3 billion over the first quarter of 2003. In total, eleven biotechnology companies (including three non-US companies) have completed IPOs in the first quarter of 2004.

The strong industry performance during the first quarter of 2004, followed the activity in 2003 as seven companies went public raising a total of $453 million during the year. In the forth quarter of 2003, the industry raised nearly $1.6 billion in debt and for the full year of 2003 raised a total of almost $7.2 billion compared to a total of $5.3 billion in 2002.

Conversion to Business Development Company

On December 31, 2002, Oxford elected to be regulated as a business development company under the 1940 Act. The results of operations for 2002 reflect Oxford’s results prior to operating as a business development company. There was no cumulative effect of accounting change for the conversion to a business development company on December 31, 2002. Accounting principles used in the preparation of the financial statements as a business development company differ from those used in preparing financials for an ordinary corporation primarily with regard to the carrying value of investments and the accounting for income taxes.

As a regulated investment company, Oxford began to make quarterly distributions beginning in 2003. Regulated investment companies generally are not subject to federal income tax on the portion of their income that they distribute to their stockholders if they meet certain minimum distribution requirements. Oxford intends to meet these requirements by distributing to its stockholders all of its income, except for certain net capital gains. If this happens, stockholders will be treated for tax purposes as if they received an actual distribution of the capital gains and reinvested the net after-tax proceeds in Oxford. Stockholders also may be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to such stockholder’s allocable share of the tax Oxford pays on the capital gains deemed distributed to the stockholder.

Oxford was taxed as an ordinary corporation through December 31, 2002.

PORTFOLIO COMPOSITION AND ASSET QUALITY

We make loans primarily to emerging-growth life sciences companies to finance equipment acquisitions that are essential to their businesses. Our loans will range from $300,000 to $8,000,000 (averaging approximately $3,000,000), and mature in approximately three to four years. Generally, our loans accrue interest at a fixed rate of from 8% to 14% and are not rated by any debt rating agency. The average effective rate and term of our loans at March 31, 2004 is approximately 12% and 40 months. Our loans are generally collateralized by a first priority security interest in essential-use assets, primarily laboratory equipment, and to a lesser extent, computers, furniture, software and manufacturing equipment that tends to retain secondary market value The monthly amortization of the loans is intended to keep the loan balances in line with secondary market values based on management’s experience. Generally, we

do not finance special purpose or customized equipment. The loans are fully amortized over the term, with payments of principal and interest being required on a monthly basis.

Through March 31, 2004, we have made loans to 62 portfolio companies for a total of approximately $103 million. Investments in portfolio companies increased from $63,346,770 to $66,266,371 during the first quarter of 2004. Repayments during the year ended December 31, 2003 include a prepayment in full of an investment in a portfolio company with a balance of $5,948,421 in 2003. This portfolio company was acquired during the first quarter of 2003, and the new parent company elected to repay the loan as well as a prepayment fee of $551,759 which is included in interest and fee income in the statement of operations.

Total investment activity as of and for the three months ended March 31, 2004 was:


Beginning Portfolio: January 1, 2004	$	63,346,770
Originations/Net Draws		9,233,835
Repayments		<6,290,440	>
Net Change in Appreciation (Depreciation) on Loans and Warrants		(23,795	)

Ending Portfolio March 31, 2004	$	66,266,370

The majority of our investments are senior secured loans. Our investments in equity securities are warrants to acquire equity interests. The receipt of warrants allows us to participate in positive changes in the value of the portfolio company. The following table shows the fair value of our portfolio by asset class as of March 31, 2004 and December 31, 2003:


	Investments at Fair Value				Investments at Fair Value
	March 31, 2004				December 31, 2003
Senior Debt	$	64,297,175	96.8	%	$	61,361,396	96.8	%
Investments in Equity Securities		1,666,330	2.7	%		1,682,509	2.7	%
Other Investments		302,865	0.5	%		302,865	0.5	%

Total	$	66,266,370	100.0	%	$	63,346,770	100.0	%

Set forth below is a table showing the composition of Oxford’s portfolio by industry section at cost and fair value at March 31, 2004 and December 31, 2003.


	Investments at Fair Value
	March 31, 2004					December 31, 2003
			Percent of					Percent of
Industry Sector:	Investment		Total			Investment		Total
Therapeutics	$	34,824,134		54	%	$	34,003,439		54	%
Enabling technology		21,462,824		33	%		20,145,320		32	%
Diagnostics		1,684,676		3	%		1,863,350		3	%
Agriculture biotechnology		1,328,397		2	%		1,155,348		2	%
Other		6,966,340		8	%		6,179,313		10	%

Total	$	66,266,370		100	%	$	63,346,770		100	%


	Investments at Cost
	March 31, 2004					December 31, 2003
			Percent of					Percent of
Industry Sector:	Investment		Total			Investment		Total
Therapeutics	$	34,788,516		53	%	$	33,952,177		54	%
Enabling technology		21,575,506		34	%		20,259,032		32	%
Diagnostics		1,686,611		3	%		1,863,868		3	%
Agriculture biotechnology		1,340,337		2	%		1,161,945		2	%
Other		6,968,890		8	%		6,179,443		10	%

Total	$	66,359,860		100	%	$	63,416,465		100	%

In addition to various risk management and monitoring tools, we also use a rating system to characterize and monitor our expected level of returns on each loan and warrant in our portfolio. We use the following 1 to 5 rating scale. Below is a description of the conditions associated with each rating:


Rating		Summary Description
1		Capital gain expected
2		Full return of principal and interest expected with customer performing in accordance with plan
3		Full return of principal and interest expected but customer requires closer monitoring
4		Some loss of interest expected but still expecting an overall positive internal rate of return
5		Loss of interest and some loss of principal expected which would result in an overall negative internal rate of return

The following table shows the distribution of our loans and warrants on the 1 to 5 rating scale at fair value as of March 31, 2004 and December 31, 2003:


	March 31, 2004					December 31, 2003
Investment	Investments at		Percent of			Investments at		Percent of
Rating	Fair Value		Total Portfolio			Fair Value		Total Portfolio
1	$	9,391,076		14	%	$	12,246,832		19	%
2		53,494,787		81	%		48,620,746		77	%
3		3,077,642		5	%		2,176,327		3	%
4		302,865		0	%		302,865		0	%
5		—		—			—		—

	$	66,266,370		100	%	$	63,346,770		100	%

We monitor loan concentrations in our portfolio, both on an individual loan basis and on a sector or industry basis, to manage overall portfolio performance due to specific customer issues or specific industry issues. At March 31, 2004, of the investments with a 4 rating, the entire amount is on non-accrual status and is classified on the balance sheet as “Other Investments.”

We monitor individual customer’s financial trends in order to assess the appropriate course of action with respect to each customer and to evaluate overall portfolio quality. We closely monitor the status and performance of each individual investment on a quarterly and, in some cases, a monthly or more frequent basis. When a loan becomes 90 days or more past due, or if we otherwise do not expect the customer to be able to service its debt and other obligations, we will, as a general matter, place the loan on non-accrual status and cease recognizing interest income on that loan until all principal has been paid. However, we may make exceptions to this policy if the investment is well secured and in the process of collection.

When principal and interest on a loan is not paid within the applicable grace period, we will contact the customer for collection. At that time, we will make a determination as to the extent of the problem, if any. We will then pursue a commitment for immediate payment and will begin to more actively monitor the investment. We will formulate strategies to optimize the resolution process and will begin the process of restructuring the investment to better reflect the current financial performance of the customer. Such a restructuring may involve deferring payments of principal and interest, adjusting interest rates or warrant positions, imposing additional fees, amending financial or operating covenants or converting debt to equity. In general, in order to compensate us for any enhanced risk, we receive appropriate compensation from the customer in connection with a restructuring. During the process of monitoring a loan that is out of compliance, we will in appropriate circumstances send a notice of non-compliance outlining the specific defaults that have occurred and preserving our remedies, and initiate a review of the collateral. When a restructuring is not the most appropriate course of action, we may determine to pursue remedies available under our loan documents or at law to minimize any potential losses, including initiating foreclosure and/or liquidation proceedings.

At March 31, 2004, there was one investment classified on the balance sheet as “Other Investments” with a fair value of approximately $302,000, or approximately 0.5%, of the investment portfolio. This portfolio company, which Oxford had made a loan to during early 2002, filed for Chapter 7 bankruptcy protection on December 3, 2002. During 2002, this loan investment was placed on non-accrual status and the Company recorded a provision for loan loss of $315,000. During 2003, Oxford took possession of certain collateral that had secured this loan. We believe the value of this collateral approximates the current recorded investment balance. There can be no assurance that the collateral value will be sufficient to repay the investment in full. We had no other loans or investments that were greater than 30 days delinquent at March 31, 2004. Subsequent to March 31, 2004, one portfolio customer with loans with a fair value of approximately $1,325,000 became 30 days past due. Oxford management believes that the investment is fairly valued and has not recorded any adjustments to its value. Other than as described above, no other investments were greater than 30 days past due.

Prior to our conversion to a business development company, we provided an allowance for loan losses estimated to be sufficient to absorb probable future losses, net of recoveries. From inception through December 31, 2002, we had provided $315,000 of allowance for loan losses.

Industry Condition

During the quarter ended March 31, 2004, biotechnology companies had substantial venture capital funding activity and was the best first quarter since 2000. Biotechnology companies continued to access large amounts of capital both publicly and privately. In addition, during the quarter, biotech had significant FDA approvals, forged significant partnerships and raised more money than ever before. Biotech raised a total of $5.4 billion in the fourth quarter versus $5.3 billion for the first quarter of 2004, and more than $3 billion over the first quarter of 2003. In total, eleven biotechnology companies (including three non-US companies) have completed IPOs in the first quarter of 2004.

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2004 and 2003

Operating Income and Expenses

INTEREST AND FEE INCOME

Interest and fee income from loans to private and public companies increased to $1,863,012 during the three months ended March 31, 2004 (“First Quarter 2004”), as compared to $1,854,686 during the three months ended March 31, 2003 (“First Quarter 2003”). Repayments during the first quarter of 2003 include a prepayment in full of an investment in a portfolio company with a balance of $5,948,421 in 2003. This portfolio company was acquired during the first quarter of 2003, and the new parent company elected to repay the loan as well as a prepayment fee of $551,759 which is included in interest and fee income in the statement of operations. This customer was acquired during the First Quarter of 2003 and the new parent company elected to repay the loan as well the prepayment fee of $551,759. Interest income is affected by both the level and creditworthiness of net new investments and by changes in interest rates. Repayments during the First Quarter of 2004 were approximately $125,000 from a customer who repaid us in full as they wound down there operations. The average interest rate on loans to portfolio companies was 11.5% and 12.2% at March 31, 2004 and 2003 respectively.

Interest income from cash and cash equivalents has decreased from $29,946 in the First Quarter of 2003 to $671 in the First Quarter of 2004. The interest on invested cash and cash equivalents primarily reflects the interest we received on the investment of the proceeds of our placement of common shares at the end of the First Quarter of 2002. As we have funded additional investments and utilized our cash, income from invested cash and cash equivalents has declined. The interest rate on invested cash was 1.00% and 1.25% at March 31, 2004 and 2003 respectively.

EXPENSES

Expenses for the First Quarter of 2004 were $1,187,114 as compared to $883,374 for the First Quarter of 2003. This amount consisted primarily of salaries and benefits, interest and financing fees, and general and administrative expenses.

Salaries and benefits consisted of $523,809 for the First Quarter of 2004 as compared to $445,872 for the first quarter of 2003. In the first quarter of 2004, the results include additional loan officers and certain administrative staff as compared to the First Quarter of 2003.

Interest and financing fees of $348,833 represented costs associated with the loan facility and borrowings during the First Quarter of 2004, as compared to $134,638 during the First Quarter of 2003. During the First Quarter of 2004 the Company had drawn additional borrowings available under its credit facilities. At March 31, 2004, the company had 20,688,714 outstanding on its notes payable compared to $7,131,205 at March 31, 2003.

General and administrative expenses were $314,472 during the First Quarter of 2004 as compared to $252,864 during the First Quarter of 2003. During the First Quarter of 2004, major components of general and administrative expenses consisted of approximately $68,000 of legal and professional fees, travel and marketing costs of approximately $37,000, corporate director’s fees of $45,000, rent of $27,000, depreciation and amortization expenses of $24,000 and other general and administrative expenses of approximately $113,000. During 2004 the Company incurred additional legal and accounting expenses and costs related to meetings of the Board of Director’s compared to the same period during 2003

INCOME TAXES

Through December 31, 2002 we were taxed under Subchapter C of the Internal Revenue Code. We intend to elect, effective as of January 1, 2003, to be a RIC under Subchapter M of the Internal Revenue Code and will not be subject to taxation of income to the extent such income is distributed to stockholders and we meet certain minimum dividend distribution and other requirements.

REALIZED DEPRECIATION AND UNREALIZED LOSS ON INVESTMENTS

We value our investment portfolio each quarter. The valuations are reviewed by the Company’s senior management and presented to the Board of Directors, which reviews and approves the portfolio valuations in accordance with our valuation policy. During the First Quarter of 2004 the Company recorded an unrealized depreciation on investment of $23,151 and recorded a realized loss on investment of $49,657, both related entirely to equity investments, based on the board’s valuation. During the First Quarter of 2003, the Company recorded an unrealized depreciation on investment of $14,510.

COSTS ASSOCIATED WITH PENDING ASSET SALE

The Company is paying its expenses related to this transaction and has incurred approximately $313,000 during the quarter ended March 31, 2004, which are being expensed as incurred.

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM EARNINGS / NET INCOME

As a result of the operating income, operating expenses and unrealized depreciation on investments described above, we had a net increase in stockholder’s equity resulting from earnings / net income of $290,182 for the First Quarter of 2004 as compared to a net increase in stockholder’s equity resulting from earnings / net income of $1,006,802 for the First Quarter of 2003.

LIQUIDITY AND CAPITAL RESOURCES

We expect our cash on hand and cash generated from operations to be adequate to meet our cash needs at our current level of operations, including the next year if the Asset Purchase Agreement is not consummated and we continue to operate our business. We generally fund new originations using cash on hand and advances under our credit facilities.

In order to satisfy the requirements applicable to a regulated investment company, we intend to distribute to our stockholders all of our income except for certain net capital gains and adjustments for long-term incentive compensation. In addition, as a business development company, we generally are required to meet a coverage ratio of total assets to total senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 200%. As of March 31, 2004, this ratio was 291%. This requirement limits the amount that we may borrow. If the Asset Purchase Agreement is not

consummated, we anticipate needing to raise additional capital from various sources, including the public and/or private equity markets to fund growth in our investment portfolio.

At March 31, 2004, we had investments in loans to 60 portfolio companies totaling approximately $64 million. We currently have a number of non-binding loan proposal letters outstanding that we expect to close in the next 90 days resulting in additional lines of credit.

Cash provided by operating activities for the three months ended March 31, 2004, consisting primarily of our net income less working capital needs, was approximately $2,000. Net income includes accretion of non-cash unearned income, and additionally was reduced by the settlement of certain current liabilities during the three months ended March 31, 2004.

Net cash used in investing activities was $2.6 million for the three months ended March 31, 2004 as compared to $2.7 million during the comparable period in 2003, and primarily consisted of the amounts used to make loans to portfolio companies. Investments in portfolio companies decreased from approximately $10.9 million during the three months ended March 31, 2003 to approximately $9.2 million during the three months ended March 31, 2004. In addition, in 2003 net investments were reduced by the prepayment of one of our portfolio investments with a balance of approximately $5,948,000. This portfolio company was acquired during the first quarter of 2003, and the new parent company elected to repay the loan as well as a prepayment fee of approximately $552,000.

Net cash provided by financing activities was approximately $3.3 million for the three months ended March 31, 2004 and consisted primarily of net draws upon the Company’s credit facilities of $3,330,000 to fund investments in loans made during the period. During the three months ended March 31, 2003, the Company had net draws upon its credit facility of $370,000 and paid dividends of $364,000.

During the three months ended March 31, 2004, cash and cash equivalents increased from $488,000 at the beginning of the year to $1,181,000 at March 31, 2004. This increase was the result of our operating and financing activities, described above, primarily the continued investments made to portfolio companies.

During 2002, we entered into a Master Loan and Security Agreement with Farmers & Mechanics Bank (“F&M Bank”). Pursuant to the agreement, F&M Bank agreed to provide us $7,500,000 in term loans that can be drawn down through April 30, 2004. The Company has the option of selecting a fixed interest rate equal to F&M Bank’s like term cost of funds plus 320 basis points or a floating interest rate equal to the base rate plus 1 percent. The base rate is equal to the highest per annum rate published from time to time in the Wall Street Journal. The obligations to F&M Bank to repay the loans are secured by certain eligible loans. The average interest rate on our borrowings was a fixed rate of 6.32% at March 31, 2004 and the outstanding balance was $5,518,000.

On October 17, 2003, the Company entered into a Master Loan and Security Agreement with National City Bank, as administrative agent, and other lenders as part of a syndicate. Pursuant to the agreement, National City Bank and other lenders agreed to provide the Company $35,000,000 in revolving loans that must be drawn down by May 31, 2005. If the Company draws on the line of credit, the Company has the option of selecting an interest rate equal to the 30-Day LIBOR plus 325 basis points or the base rate which is the prime rate plus 150 basis points. The obligations to National City Bank and other lenders to repay the loans are secured by certain eligible loans. Concurrent with this agreement, the Company terminated its previous Master Loan and Security Agreement, as amended, with National City Bank dated September 25, 2003 and repaid all outstanding amounts. At March 31, 2004, the Company has utilized $18,500,000 of this line and has $16,500,000 remaining available.

The syndicated credit facility with National City Bank and other lenders are revolving loans with a current maturity date of May 31, 2005. The syndicated credit facility has a maturity date of May 31, 2005.

During the second half of 2003, the Company engaged a financial advisor (i) to investigate various strategic alternatives that the Company may wish to pursue, including a possible sale of the Company; and (ii) to assist management and the board of directors with analyzing these alternatives. After reviewing the various alternatives and analyzing comparative transactions, the Company entered into purchase price, transaction and related negotiations with Sumitomo. The parties determined that the purchase price for the assets would consist of an initial payment at the closing of $49 million in cash and an additional contingent payment of up to $2 million, which shall be paid within 90 days of the closing and is subject to certain post-closing adjustments fully described in the Agreement. In addition, Purchaser will pay to the Company at the closing an amount up to $36.0 million, if necessary to extinguish all amounts owed by the Company under its bank credit agreements, Assuming the closing occurs during the second quarter of 2004, the Company estimates that Purchaser will require approximately $24 million to extinguish the Company’s debt under the Company’s bank credit agreements. Oxford has not entered into any new bank credit agreements after March 31, 2004 or extended any loans other than loans in the ordinary course of business.

Upon the closing of the transaction, the Company, will receive cash from Sumitomo which will be distributed to the shareholders in a timely manner. Upon the closing, Oxford will no longer need to utilize its credit facilities and SCOA will satisfy the balance of the notes payable currently held by Oxford. Oxford expects to retain cash sufficient to satisfy all of its other liabilities prior to dissolving the Company.

Dividends

We are required to distribute at least 90% of our investment company taxable income to avoid corporate level taxes on the amount distributed and at least 98% of our investment company taxable income to avoid an excise tax. We intend to make distributions on a quarterly basis to our stockholders of all of our income, except for certain net capital gains and adjustments for long-term incentive compensation expense.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage test for borrowings applicable to us as a BDC and due to provisions in our credit facilities. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of our status as a regulated investment company. We cannot assure shareholders that they will receive any distributions or distributions at a particular level.

The following table summarizes our dividends declared to date:


Date Declared	Record Date	Payment Date	Amount
December 3, 2003	December 15, 2003	December 31, 2003	$0.15
September 2, 2003	September 15, 2003	September 30, 2003	$0.11
May 30, 2003	June 13, 2003	June 30 2003	$0.19
February 28, 2003	March 14, 2003	March 31, 2003	$0.07
November 4, 2002	December 15, 2002	December 31, 2002	$0.03
September 5, 2002	September 15, 2002	September 30, 2002	$0.02

All dividends paid during 2002 and 2003 were characterized as ordinary income with no return of capital or capital gain components.

Portfolio Companies

Set forth below is a description of the one portfolio company that is in excess of 5% of our portfolio.

Infinity Pharmaceuticals, Inc.

In October 2002, we provided a line of credit to and received warrants from Infinity Pharmaceuticals, Inc. Infinity Pharmaceuticals, Inc., is a drug discovery company that is developing and integrating unique approaches and capabilities in synthetic chemistry, chemical genetics, informatics, and biological screening. The company is positioned to capitalize on the enormous opportunity resulting from the genomics revolution by providing pharmaceutically active and selective new drug candidates to a broad, expanded range of well-validated biological targets. As of March 31, 2004, the outstanding loan balance was $3,919,000.

Critical Accounting Policies

There were no changes in the Company’s critical accounting policies from those described in the Company’s 2003 Form 10-K.

The staff of the Commission has informed Oxford that a business development company should provide the interest rates and maturity dates applicable to loan transactions such as those presented in the Schedule of Investments set forth on page 7 to satisfy reporting requirements under the U.S. federal securities laws. Oxford believes that the Schedule of Investments in the form presented is consistent with its historical practice and the current practices of other business development companies. In light of the asset sale and liquidation of Oxford and the fact that OAC is not expected to be a reporting company under the Securities Exchange Act of 1934, the Company has not restated the Schedule of Investments to include this information

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest rate sensitivity refers to the change in earnings that may result from the changes in the level of interest rates. We are subject to financial market risks, including changes in interest rates. Our loans in our portfolio will be made at fixed rates. Our net interest expense is affected by changes in various interest rates, including LIBOR and prime rates. At March 31, 2004 78% of our borrowings bore interest at a spread to LIBOR or the prime rate with the remainder bearing interest at a fixed rate.

We invest primarily in illiquid debt securities of private companies. Our investments generally have no established trading market. Since there is typically no ready market for the investments in our portfolio, once we elect to be regulated as a BDC, our board of directors will determine in good faith the fair value of these investments pursuant to a valuation policy. We will value substantially all of our investments at fair value as determined in good faith by the board of directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make.

We regularly measure exposure to interest rate risk. We have interest rate risk exposure mainly from the portion of the loan portfolio funded using stockholders’ equity or fixed rate borrowings. Our board of directors assesses interest rate risk and we manage our interest rate exposure on an ongoing basis. The following table shows a comparison of the interest rate base for our outstanding commercial loans and our outstanding borrowings at March 31, 2004 and December 31, 2003:

Amount of borrowings based at:


	March 31,		December 31,
	2004		2003
30-Day LIBOR	$	14,000,000	$	9,000,000
Prime		4,500,000		5,500,000
Fixed Rate Borrowings		5,518,147		6,188,714

Total	$	24,018,147	$	20,688,714

Based on our March 31, 2004 balance sheet, for a 100 basis point increase in interest rates, our annual interest expense would increase by $185,000 resulting in a decrease in annual net income of $185,000, assuming no changes in our investments or borrowing structure.

As a business development company, we our leverage is limited. Accordingly, other things being equal, increases in interest rates will result in greater increases in our net interest income and reductions in interest rates will result in greater decreases in our net interest income as compared with the effects of interest rate changes for more highly leveraged capital structured companies.

Currently, we do not engage in hedging activities because we have determined that the cost of hedging the risks associated with interest rate changes outweighs the risk reduction benefit. We monitor this position on an ongoing basis.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14 and 15d-14 under the Securities and Exchanges Act of 1934, as amended) as of a date within 90 days prior to filing this quarterly report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company required to be included in the Company’s reports filed or submitted under the Securities Exchange Act of 1934.

Changes in Internal Controls.

Since the Evaluation date, there have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect such controls.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is not currently subject to any material legal proceeding, nor, to the Company’s knowledge, is any material legal proceeding threatened against the Company.

ITEM 2. Changes in Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Submission of Matters to a Vote of Security Holders

None.

ITEM 5. Other Information

None.

ITEM 6. Exhibits and Reports on Form 8-K

On January 29, 2004 the Company filed Form 8-K to announce that it had entered into a definitive Asset Purchase Agreement (the “Agreement”) with Oxford Acquisition Corp, a Delaware corporation (“Purchaser”) and a wholly-owned subsidiary of Sumitomo Corporation of America, a New York corporation and integrated global trading firm with diversified investments in businesses producing both capital and consumer products. Under the Agreement, Purchaser will acquire all of the assets and assume certain liabilities related to the Company’s business of providing senior secured equipment financing primarily to emerging-growth life science companies, including, without limitation, all of the Company’s financing contracts, leases, securities or warrants issued in connection with any financing contract and all intangible assets, such as the rights to use the name “Oxford Finance Corporation”.

On February 6, 2004, the Company filed with Form 8-K the Asset Purchase Agreement referenced above.

(b) Exhibits


		31.1*		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Act of 1934.

		31.2*		Certification of Chief Financial Officer Pursuant Rule 13a-14(a) or 15d-14(a) under the Securities Act of 1934.

		32.1+		Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

		32.2+		Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


		PAGE
PART I.	FINANCIAL INFORMATION		3

Item 1.	Financial Statements		3
	Balance Sheets as of March 31, 2004 (unaudited) and December 31, 2003		3
	Statements of Operations for the three months ended March 31, 2004 and 2003(unaudited)		4
	Statement of Stockholders’ Equity for the three months ended March 31, 2004 (unaudited)		5
	Statement of Cash Flows for the three months ended March 31, 2004 and 2003 (unaudited)		6
	Schedule of Investments as of March 31, 2004 (Unaudited) and December 31, 2003		7
	Notes to Financial Statements (unaudited)		14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
	Overview		20
	Results of Operations		24
	Liquidity and Capital Resources		25

Item 3.	Quantitative and Qualitative Disclosure About Market Risk		28

Item 4.	Control Procedures		29

PART II.	OTHER INFORMATION		30

Item 1.	Legal Proceedings		30

Item 2	Changes in Securities and Use of Proceeds		30

Item 3	Defaults upon Senior Securities		30

Item 4	Submission of Matters to a Vote of Security Holders		30

Item 5	Other Information		30

Item 6	Exhibits and Reports on Form 8-K		30


										Net realized and
					Capital in		Earnings			unrealized			Total
	Common Stock				Excess of Par		in excess of			depreciation			Stockholders’
	Shares		Amount		Value		distributions			on investments			Equity
Balance at December 31, 2003		5,200,000	$	52,000	$	45,739,152	$	(56,411	)	$	(69,695	)	$	45,665,046
Net increase / (decrease) in stockholders’ equity resulting from net earnings								313,977			(23,795	)		290,182

Balance at March 31, 2004		5,200,000	$	52,000	$	45,739,152	$	257,566		$	(93,490	)	$	45,955,228


		OXFORD FINANCE CORPORATION

		BY: /s/ Michael J. Altenburger


		Chief Financial Officer and Treasurer

		Date: May 13, 2003

(1)		Non-income producing.

(2)		None of the investments listed are readily marketable. The warrants we hold represent, in each instance, less than 1% of the company issuing the warrants and are not currently income producing.

(3)		The portfolio company is publicly traded.